Chapter14IndustryAnalysis(投资分析与投资组合管理)(45页PPT).pptx

Lecture Presentation Software to accompanyInvestment Analysis and Portfolio ManagementSeventh Editionby Frank K.Reilly&Keith C.BrownChapter 14Chapter 14Industry AnalysisQuestions to be answered:Is there a difference between the returns for alternative industries during specific time periods?What is the implication of these results?Is there consistency in the returns for individual industries over time?What do these results imply regarding industry analysis?Chapter 14Industry AnalysisIs the performance for firms within an industry consistent?What is the implication of these results for industry and company analysis?Is there a difference in risk among industries?What are the implications of these results for industry analysis?Chapter 14Industry AnalysisWhat happens to risk for individual industries over time?What does this imply for industry analysis?What are two variables that need to be estimated whether you use cash flow models or relative valuation ratios?Chapter 14Industry AnalysisGiven the present value of cash flow valuation techniques,how does an analyst determine the value of an industry using the DDM and assuming constant growth or two stage growth?How does an analyst determine the value of an industry using the free cash flow to equity(FCFE)model with constant growth or two stage growth?Chapter 14Industry AnalysisWhat are the steps involved in estimating earnings per share for an industry?What are the stages in the industrial life cycle and how does the life cycle stage affect the sales estimate for an industry?What are the five basic competitive forces that determine the intensity of competition in an industry and thus,its rate of return on capital?Chapter 14Industry AnalysisHow does the estimating procedure for the operating profit differ for the aggregate market versus an industry?What are the two alternative procedures for estimating an industry earnings multiplier?Chapter 14Industry AnalysisWhat is involved in a macroanalysis of the industry earnings multiplier?What are the steps in the microanalysis of an industry earnings multiplier?After you estimate an industry earnings multiplier,how do you determine if the industrys multiplier is relatively high or low?Chapter 14Industry AnalysisHow do industries differ in terms of what dictates their return on assets?What are some of the unique factors that must be considered in global industry analysis?Why Do Industry Analysis?Help find profitable investment opportunitiesPart of the three-step,top-down plan for valuing individual companies and selecting stocks for a portfolioWhat Do We Learn From Industry Analysis?Is there a difference between the returns for alternative industries during specific time periods?Will an industry that performs well in one period continue to perform well in the future?That is,can we use past relationships between the market and an individual industry to predict future trends for the industry?What Do We Learn From Industry Analysis?Do firms within an industry show consistent performance over time?What Do We Learn From Industry Analysis?Do firms within an industry show consistent performance over time?Is there a difference in the risk for alternative industries?What Do We Learn From Industry Analysis?Do firms within an industry show consistent performance over time?Is there a difference in the risk for alternative industries?Does the risk for individual industries vary or does it remain relatively constant over time?Industry PerformanceWide dispersion in rates of return in different industriesPerformance varies from year to yearCompany performance varies within industriesRisks vary widely by industry but are fairly stable over timeThe Business Cycle and Industry SectorsEconomic trends can and do affect industry performanceBy identifying and monitoring key assumptions and variables,we can monitor the economy and gauge the implications of new information on our economic outlook and industry analysis The Business Cycle and Industry SectorsCyclical or Structural ChangesCyclical changes in the economy arise from the ups and downs of the business cycleStructure changes occur when the economy undergoes a major change in organization or how it functionsRotation strategy is when one switches from one industry group to another over the course of a business cycle The Business Cycle and Industry SectorsEconomic Variables and Different IndustriesInflationInterest RatesInternational EconomicsConsumer Sentiment The Stock Market and the Business CycleExhibit 14.2The Stock Market and the Business CycleExhibit 14.2troughpeakThe Stock Market and the Business CycleExhibit 14.2Financial Stocks ExceltroughpeakConsumer Durables ExcelCapital Goods ExcelBasic Industries ExcelConsumer Staples ExcelStructural Economic Changes and Alternative IndustriesSocial InfluencesDemographicsLifestylesTechnologyPolitics and regulationsEconomic reasoningFairnessRegulatory changes affect numerous industriesRegulations affect international commerceEvaluating the Industry Life CycleFive Stage ModelPioneering developmentRapidly accelerating industry growthMature industry growthStabilization and market maturityDeceleration of growth and declineAnalysis of Industry CompetitionCompetition and Expected Industry ReturnsPorters concept of competitive strategy is described as the search by a firm for a favorable competitive position in an industryTo create a profitable competitive strategy,a firm must first examine the basic competitive structure of its industryThe potential profitability of a firm is heavily influenced by the profitability of its industry Competitive Structure of an IndustryPorters Competitive ForcesRivalry among existing competitorsThreat of new entrantsThreat of substitute productsBargaining power of buyersBargaining power of suppliersEstimating Industry Rates of ReturnPresent value using required rate of return for the equity in the industryTwo-step P/E ratio approach uses expected value at the end of investment horizon and compute the expected dividend return during the periodValuation using the reduced form DDMPi=the price of industry i at time tD1=the expected dividend for industry i in period 1 equal to D0(1+g)k=the required rate of return on the equity for industry ig=the expected long-run growth rate of earnings and dividend for industry iEstimating the Required Rate of ReturnInfluenced by the risk-free rateExpected inflation rateRisk premium for the industry versus the marketbusiness risk(BR)financial risk(FR)liquidity risk(LR)exchange rate risk(ERR)country political risk(CR)Or compare systematic risk(beta)for the industry to the market beta of 1.0Estimating the Expected Growth RateEarnings and dividend growth are determined by the retention rate and the return on equityEarnings retention rate of industry compared to the overall marketReturn on equity is a function of the net profit margintotal asset turnovera measure of financial leverageIndustry Valuation Using the Free Cash Flow to Equity(FCFE)ModelFCFE is defined as follows:Net income+Depreciation-Capital expenditures-D in working capital-Principal debt repayments+New debt issuesIndustry Valuation Using the Free Cash Flow to Equity(FCFE)ModelThe Constant Growth FCFE ModelThe Two-Stage Growth FCFE Model The Earnings Multiple TechniqueEstimating earnings per sharestart with forecasting sales per shareIndustrial life cycleInput-output analysisIndustry-aggregate economy relationshipearnings forecasting and analysis of industry competitioncompetitive strategycompetitive environmentindustry operating profit marginindustry earnings estimateindustry earnings multiplierIndustry Profit Margin ForecastIndustrys operating profit margin(EBITDA/Sales)Depreciation expenseinterest expensetax rateIndustry Profit Margin ForecastIndustrys operating profit margin(EBITDA/Sales)Regression analysisTime series analysisLong-term consideration including competitive structureIndustry Profit Margin ForecastDepreciation expenseGenerally increasing time seriesSpecific estimate technique using the depreciation expense/PPE ratioSubtract depreciation from operating profit margin to determine industrys net before interest and taxesIndustry Profit Margin ForecastInterest expense is a function of financial leverage and interest rates1.Calculate the annual total asset turnover(TATO)2.Use your current sales estimate and an estimate of TATO to estimate total assets next year3.Calculate the annual long-term(interest bearing)debt as a percent of total assets,4.Estimate long-term debt for the next yearIndustry Profit Margin ForecastInterest expense(cont.)5.Calculate the annual interest cost as a percent of long-term debt and analyze the trend6.Estimate next years interest cost of debt for this industry based upon your prior estimate of market yields7.Estimate interest expense based on the following estimates:(Interest Cost of Debt)(Outstanding Long-Term Debt)Industry Profit Margin ForecastTax rateRegression analysisTime series plotAfter estimating the tax rate,multiply the EBT per share value by(1-tax rate)to estimate earnings per shareDerive an estimate of industrys net profit margin as a check on your EPS estimateEstimating an Industry Earnings MultiplierMacroanalysisrelationship between multiplier for the industry and the marketvariables that influence the multiplier:required rate of return(k)function of the nominal risk-free rate plus a risk premiumexpected growth rate of earnings and dividenddividend payout ratioEstimating an Industry Earnings MultiplierMicroanalysisEstimate the variables that influence the industry earnings multiplier and compare them to the comparable values for the market P/EIndustry multiplier versus the market multiplierComparing dividend-payout ratiosEstimating the required rate of return(k)Estimating the expected growth rate(g)g=Retention Rate(b)X Return on Equity(ROE)=(b)X(ROE)Other Relative Valuation Ratios Price-to-book value ratios(P/BV)Price-to-cash flow ratios(P/CF)Price-to-sales ratios(P/S)Global Industry AnalysisThe macroeconomic environment in the major producing and consuming countries for this industryAn overall analysis of the significant companies in the industry and the products they produceWhat are the accounting differences by country and how do these differences impact the relative valuation ratios?What is the effect of currency exchange rate trends for the major countries?The InternetInvestments OnlineEnd of Chapter 14Industry AnalysisFuture topicsChapter 15 Company Analysis and Stock SelectionValueGrowthStrategies1、每一个成功者都有一个开始。勇于开始，才能找到成功的路。11月-2211月-22Wednesday,November 9,20222、成功源于不懈的努力，人生最大的敌人是自己怯懦。00:19:4400:19:4400:1911/9/2022 12:19:44 AM3、每天只看目标，别老想障碍。11月-2200:19:4400:19Nov-2209-Nov-224、宁愿辛苦一阵子，不要辛苦一辈子。00:19:4400:19:4400:19Wednesday,November 9,20225、积极向上的心态，是成功者的最基本要素。11月-2211月-2200:19:4400:19:44November 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